CpG methylation has been linked to transcriptional regulation, genomic imprinting, and development. CpG methylation is tightly regulated during replication and differentiation of somatic cells. Alteration of methylation patterns has also been frequently observed in cancers. Although changes of methylation patterns during development and carcinogenis have been studied extensively, the mechanisms of the methylation changes have not been explored. Understanding of the impact and mechanism of DNA methylation could provide insights into human diseases recently found to be caused by mutations in methylation-related genes. It has been the goal of the investigators to dissect the impact of DNA methylation on transcription and the mechanism of demethylation utilizing the episomal system that they have developed in the past three years of the funding period. They have made important progress in the understanding of these events. In the next few years, they would like to continue to take advantage of this simplified system to test the following hypotheses: (1) Protein binding can protect sites from de novo methylation. (2) Methylation-mediated histone deacetylation is a local effect that only impacts the most immediate nucleosomes. (3) MeCP2 affects CpG poor and CpG rich DNA differently. They would also like to further investigate some of the same events and processes in the chromosomes using chromosomally integrated systems. This will allow direct comparison of the episomal and the integrated systems. If these events and processes are the same on the episome and in the chromosome, the episomal system can be used more aggressively to study methylation processes of endogenous genes. If differences in these two systems are found, the understanding of the basis of these differences will also provide insights regarding the dynamics of DNA methylation.